I am currently on OPT (F-1) status. I have South African citizenship. I have been granted an H1-B visa which I have until the end of my OPT status to activate. The plan was to activate in around a year when OPT expires, as I have no inclination to leave the U.S right now (it must be activated from abroad).

This position might be worth reconsidering if I am subject to real tax disadvantages because of my OPT F1 status.

I am single. I rent. I don't have kids. I live and work in New York. My income will be roughly $3K gross a week, but will constitute only part of the tax year. I have not worked since August 2007, and will be starting my job soon. I have been in the U.S. permanently since around August 2006. This past year I filed 1040NR for the work I did over Summer 2007.

1. What tax benefits, or burdens if any would result in me activating H1-B?
2. Assuming I remain on OPT, would I still be filing the NR form because of the F1 status? Do I have the option to file the normal tax resident forms because of the nature of my residence? etc.
3. How should I fill out my W4 for the upcoming job? Single, with zero, 1, or 2 deductions?

I would be most appreciate if one of the knowledgeable users could provide well written response to these issues. I would be looking to have paid professional on hand for future tax related advice.

Thanks!

1. On H1-B, you pay FICA taxes and you will file resident tax return if you meet SPT. On resident tax return, you will get standard deduction but no deduction as per tax treaty. Read Your U.S. Tax Return: Substantial Presence Test (http://taxipay.blogspot.com/2008/04/substantial-presence-test.html)

2. On OPT/F1 you are exempt for 5-years. Must file non-resident tax return and get deduction as per tax treaty.
Read about F1 & H1-B tax filing: Your U.S. Tax Return: The U.S. Visas (http://taxipay.blogspot.com/2008/08/us-visas.html)

There is no treaty deduction. The question remains, which will save more money?